The first purpose of this article is to outline an approach to war finance which probably receives the approval of most economists, but which has seldom if ever been set down in black and white. This approach is that of a balance between the expansive and restrictive forces operating on money incomes. An alternative approach is the popular three-fold division of the subject into “taxation, borrowing, and inflation”; and it is argued at the end of the article that this approach is likely to be misleading. Certainly it is often misused. But before discussing the “three-fold division” it is convenient to see what light the “balance of forces” approach throws on the role of war loans and of central banking operations. The approach itself is probably more widely understood than are its implications in these directions.

No attempt is made to explain why taxation is generally preferable to borrowing or why inflation is to be avoided. That ground is by now sufficiently familiar. This article proceeds on the assumption that taxation will be used as far as it can be without damage to civilian morale and business incentive, but that a considerable amount of borrowing will be required nevertheless. The assumption is also made that inflation is undesirable. This is a point on which economists seem to have reached general agreement. Yet it is not beyond dispute; nor would the present writer wish to interpret the policy very rigorously.

Aviation changes so rapidly that one is virtually compelled to acquire wings oneself in order to keep up with it. Moreover, there is a scarcity of accurate information on many matters in which the economist is particularly interested. Nevertheless it is worth while to outline some of the economic aspects first of air transport in general and, secondly, of airplane transportation in Canada. The analysis is necessarily incomplete but it is hoped that it will serve as a basis for further discussion.

Air transport can best be dealt with under its most important characteristics—speed, reliability, safety, cost, scheduling, completeness, and comfort. Speed, of course, is the greatest single advantage of airplanes over competing forms of transportation. The characteristic of speed arises both from high speeds per hour while in motion and the fact that the planes can fly in a direct line without much regard to the underlying terrain. Scheduled aviation maintains an average of 180 miles per hour in the United States. On the San Francisco-New York fast sleeper service, however, the average speed is 165 miles per hour compared with 161 miles per hour on Trans-Canada's Vancouver-Montreal service. As these figures include stops, flying speeds are more than 200 miles per hour. Because air resistance increases as the square of the speed there would seem to be definite limits to still higher regular speeds except, as in military service, where costs can be ignored. On the other hand, past experience with prophecy in aviation indicates the dangers of prediction. Moreover, sub-stratosphere flights at upwards of 400 miles per hour are an immediate possibility. Speed is significant mainly in the longer hauls for in the shorter distances the time involved in going between the terminal airports, which are usually on the outskirts of the city and downtown business sections, offsets any reduction in travelling time in the line haul. The terminal difficulty may be overcome by taxicab services to and from the fields or by higher line speeds or by the expensive process of locating terminals near down-town areas.

This paper consists primarily in the application of a rather simple diagrammatic technique to several problems in the theory of imper-fect competition which have either been neglected or which have previously submitted only to very powerful (and complicated) mathematics. In the first section of the paper we shall examine several instances where the demand schedules for a firm's output are dependent upon the prices the firm pays (and/or the quantities that it uses) for the factors of production which it hires. The second section of the paper will contain an analysis of “monopoly over time” together with an application of the technique used in solving this problem to the determination of the optimum output of each product, if the firm produces more than one.

This study aims to measure the net investment or savings of individuals and enterprises in Canada. Two methods are available, the inventory or change of stocks method and the production or flow of goods method. The first compares the capital value of all durable goods at the beginning and end of the period in question, at constant prices, the difference being net saving or dissaving (inventories excepted). The sources for this approach consist of balance sheets and other data of the type used in making an estimate of national wealth. The second, the production or flow of goods method, utilizes records of retail sales of durable goods and, where sales data do not exist, figures of production, imports and exports, etc. From these sources the selling value of all durable goods sold or available to be sold, i.e. gross investment, is estimated. From gross investment is subtracted an estimate of the value of durable goods required to maintain existing capital intact. The remainder, which we shall call net investment or net saving (the additional adjective aggregate being taken for granted in both cases), represents the value of the net addition to the stock of durable goods.

To the layman, net investment appears remote from net saving. It can be demonstrated, however, that it does not differ significantly from saving, at any rate for statistical purposes. By saving is meant excess of current income over current outgo. Current outgo is taken to include appropriate charges for depreciation but excludes repayment of debts. Saving or non-current outgo is defined to include many consumers' expenditures for capital goods, as indicated in Table I.